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INTERNATIONAL JOURNAL OF ADVANCED RESEARCH IN COMMERCE, MANAGEMENT & SOCIAL SCIENCE (IJARCMSS) [ Vol. 9 | No. 1 (II) | January - March, 2026 ]

Consumer Adoption of Embedded Finance and Spending Outcomes: Integrating Behavioural Biases and Digital Financial Literacy

Dr. Alka Chaturvedi & Ms. Vanshika Malhotra

The integration of financial services into digital commerce ecosystems has been happening at an unprecedented speed, revolutionizing consumer access to and utilization of financial services. The embedded finance phenomenon that integrates payment, lending, insurance, and investment services into non-financial digital platforms has become very popular among consumers globally. The study analyzes how consumers' willingness to use embedded finance solutions is affected by the major behavioral biases such as impulsivity, present bias, overconfidence, and herd behavior. Additionally, it discusses how digital financial literacy plays a moderating role in the process of responsible financial decision-making in embedded financial environments. Adopted a quantitative research method, where data was gathered from active customers of digital commerce platforms that provide embedded financial services. Structural Equation Modeling (SEM) is used to examine the hypothesized relationships between behavioural biases, digital financial literacy, embedded finance adoption and spending outcomes. This paper contributes to the understanding of sustainable consumer engagement with embedded financial services by combining the behavioural finance and digital financial literacy approaches and serves to inform the design of the consumer-oriented digital financial ecosystem.

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